The Exchange Rate Regime of Thailand, purchasing power parity of Essay

The Exchange Rate Regime of Thailand, purchasing power parity of Thailand - Essay Example Population of Thailand is relatively homogeneous, which consists of Buddhist 94-95%, Muslim 4-5%, Christians, Hindus and others. More than 85% of its population speak Dialect of Thai and share common culture. Like many other countries of the world, Thailand also witnessed many ups and down and was occupied by the Japanese during Second World War. Since Japan’s defeat in 1945, Thailand has had very close relations with the United States. Threatened by communist revolution in neighboring countries, such as Vietnam, Cambodia and Laos, Thailand actively sought U.S assistance to contain communist expansion in the reason. Recently, Thailand also has been an active member in multilateral organizations like the Association of South East Asian Nations (ASEAN) and the Asia-Pacific Economic Cooperation (APEC) forum. 1.1 Economic performance of Thailand: - The Thai economy is export dependent, with export accounting for 60% of GDP. Thailand recovery form the 1997-98 Asian financial crises relied largely on external demand from the United States and other foreign markets. The Thaksin government took office in February 2001 with the intention of stimulating domestic demand and reducing Thailand reliance on foreign trade and investment. Since then Thailand has embraced a â€Å"duel track† economic policy that combines domestic stimulus with Thailand’s traditional promotion of open market and foreign investment. Weak export demand held 2001 GDP growth to 2.1%. Beginning in 2002, however, domestic stimulus and export revival fueled a better performance, with real GDP growth at 6.9% in 2003 and 6.1% in 2004. Before the financial crisis, the Thai economy had years of manufacturing-led economic growth –averaging 9.4% for the decade up to 1996. Relatively abundant and inexpensive labor and natural resources, fiscal conservatism, open foreign investment policies, and encouragement of the private sector underlay the economic success in the years up to 1997. The economy is